The South African Rand firmed against the Pound but softened slightly against the US Dollar after Finance Minister Pravin Gordhan vowed to stick to spending cuts and revealed that the nation’s budget deficit will be narrower than expected next year.
Gordhans comments strengthened the Rand as investors were pleased to see that the South African government was taking firm action to stave off the nations recent economic troubles and that it acknowledged the potential risks of its reliance on foreign investors.
“We’re very mindful of the fact that there are risks at our doorstep,” Finance Minister Pravin Gordhan told reporters on Wednesday, easing investor concerns. “We believe we have what it takes to manage any turbulence that might arise.”
The Minister went on to slash the nation’s growth forecast for this year to 2.1% from the previous forecast of 2.7%. The main cause for the cut in expectations was blamed on the widespread labour unrest which continues to put the country’s mining and auto industries at risk, he also highlighted the growing threat from power constraints. The continuing economic weakness in Europe was also blamed for the slowdown.
“Labour disputes, electricity shortages and other supply-side disruptions have weighed down business and consumer confidence, and lowered demand for goods and services, Effective resolution of these problems will boost confidence and economic performance” the Treasury said in its medium-term budget.
The Rand also found support from the release of weaker than expected house price and import price index data from the United States. The weaker data adds to the expectation that the Federal Reserve will postpone tapering its monetary easing programme until next year, something that supports emerging market currencies.
Current South African (ZAR) Exchange Rates:
The US Dollar/South African Rand Exchange Rate is currently in the region of: 9.8223
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.8593
The Euro/South African Rand Exchange Rate is currently in the region of: 13.5106
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.4420
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.2266
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.5118
(Correct as of 14:25 pm GMT)
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